Czech Unipetrol to close lossmaking urea installation

LONDON (ICIS)--Unipetrol will permanently shut down its 200,000 tonnes/year urea production unit as of 1 January next year, the Czech petrochemical producer and refiner said on Friday.

"The urea production unit is part of the agro division of [subsidiary] Unipetrol RPA and its impact on the profitability of the whole Unipetrol group has been negative in the last couple of years," the company said in a press release.

"No reversal of this trend is expected according to an internal evaluation and the evaluation of an independent external advisor," it added, noting the closure would cost around 50 full-time jobs.

As far back as December 2008, Unipetrol said it was considering whether it should attempt to divest the urea unit, located in Chemopark Zaluzi, in the northwestern Czech town of ?xml:namespace>Litvinov, which it described as a non-core asset.

"Unipetrol RPA’s agro technology is based on heavy oil residue which implies for the urea unit a significant feedstock cost disadvantage as compared with urea competitors and complicates unit utilisation due to changing feedstock material availability," Unipetrol said.

"Another important reason for the decision is the fact that the urea production plant‘s integrated permit is limited till 31 December 2017. The extension of the permanent operation is conditioned on an investment into a significant reconstruction of the urea production unit with required capital expenditures in the amount of several hundreds of millions of Czech koruna," it added.

"Any potential return on this investment is not expected within various scenarios of the possible future macro and business development analysed,“ the company said.